Cash-rich companies should be encouraged to help fund Britain’s economic
recovery, the new chief executive of Legal & General has said.

Nigel Wilson said the Government must turn to the private sector to improve the country’s fortunes. He claimed that companies were reluctant to invest due to economic uncertainty and were sitting on large cash reserves, which could be used to fund growth.

“Banks are currently de- leveraging, so the Government must create an environment in which corporates, sovereign wealth funds and private equity firms are able to fill the substantial funding gap.

“Commercial property lending is a good example of something we currently do and hope to do more of. Other areas like project finance could be funded by us.”

His comments came as the insurance group saw pre-tax profits rise 11pc to £525m during the six months ending June 30, on the back of strong sales of corporate and housing protection insurance. Operating profits hit £518m during the period, outstripping the £478m expected by analysts.

L&G said it had generated net cash of £407m. This helped the company raise its interim dividend by 18pc to 1.96p, payable on October 1. Elsewhere, Legal & General Investment Management saw assets under management increase by 3pc to £381bn on net inflows of £4bn.

Mr Wilson said he expected Britain’s economy to perform poorly over the next few months and predicted “further macro shocks across the world, particularly in the eurozone”. He also opened the door to potential “bolt-on” acquisitions and warned of further delays in Solvency II, the new capital rules set to govern European insurers from 2014.

“Our financial and strategic discipline creates confidence in complex and chaotic markets. We have strong businesses, and social and economic challenges bring opportunities which we intend to pursue at a faster pace.”